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Hospitals in Crisis

When Katrina McCloud was one year old, she hit her head on a coffee
table in her Brooklyn home. Her mother, Harriet, rushed her to the
emergency room at nearby St. Mary's hospital.

That was 31 years ago. The McClouds still rush to St. Mary's
emergency room -- they actually did so almost 20 times in the last year.
Now, though, the roles are reversed. Harriet, who has developed
diabetes, is in a wheelchair; Katrina lives with her and helps her
mother with a condition that has become increasingly serious.

One morning two weeks ago, Katrina noticed that Harriet's blood
pressure was spiking to a dangerously high level, one of the main risk
factors for a stroke. Immediately, the two women took off for St.
Mary's, which is only a block away from their home. "I pushed her in her
wheelchair to the emergency room myself instead of waiting for EMS,"
said Katrina. "If it wouldn't have been for them being there she would
have had a stroke."

This type of trip will no longer be possible after October 4. The
emergency room at St. Mary's -- which received 35,000 visits last year -
is shutting down, and the entire hospital will be closed within 90 days.
Katrina and Harriet McCloud will have to find somewhere else for
Harriet's regular medical needs.

St. Mary's will be the eighth hospital in New York City to close
since 2003. It is unclear how many more of the 73 remaining hospitals in
the city -- 11 of them publicly owned -- are in danger of failure, but
there is a general agreement that New York's hospitals are facing
financial crisis.

To an increasing number of experts, these financial problems signal a
major change in the health care industry to which New York must adjust.
Walk-in clinics are providing an increasing range of services once
provided only by hospitals, they say, and the state should have fewer hospitals as
a result. The state, which must approve hospital closings, has taken
this view. Governor George Pataki recently appointed a commission to
determine which hospitals should be closed.

Others sharply disagree. The main problem with the health care is not
financial, they say, it is a lack of access to health care. Simply
closing hospitals will not only fail to solve the industry's financial
problems, they argue, it will aggravate the serious inequities already
present in health care. Most of the struggling hospitals are those in
the communities that need them the most, and those likely to suffer from
future hospital closings are people like the McClouds -- residents of
low-income, medically under-served areas who are already affected
disproportionately from every chronic disease ranging from diabetes to
cancer to AIDS.

Because many people in such neighborhoods do not have health
insurance or access to reliable transportation, their health care
options are limited. Closing their local hospitals will mean -- as it
has meant in the past -- that many who need care will simply stop
getting it.

REASONS FOR FINANCIAL TROUBLES

There is no doubt that New York's hospitals are in bad shape
financially. The industry in the state has lost money for five
consecutive years (in .pdf format), even as hospitals nationwide post
profits. A smaller proportion of New York hospitals have access to
sufficient capital funds (in .pdf format) than in any other state, while
also carrying the most debt.

Last year the city's public hospital system -- the Health and
Hospitals Corporation -- ran a $200 million deficit. Operating
losses at the city's private hospitals (in .pdf format) are also rising
at a shocking rate. As a whole, private hospitals lost $190 million in
2003, close to five times the $39 million they lost the year before. The
percentage of private hospitals that ran deficits rose to 54 percent
from 40 percent over that same period.

Many things are contributing to the weak financial state of New
York's health care system:

Federal and State Regulations:

Albany determines how much money
hospitals can make from certain services, places restrictions on how
much they can invest in infrastructure and other capital projects, and
prohibits certain types of investors from owning hospitals. These
regulations were put in place to keep hospitals from making unwise or
unscrupulous financial moves, but most experts agree that they are
placing a burden on the state's hospitals.

On the federal level, changes in aid for teaching hospitals have
affected New York's community hospitals. Proposed cuts in Medicaid will
mean less money for those hospitals serving low-income communities.

Changes in Health Care Delivery:

Long-term trends in health care have
also taken a financial toll on New York City hospitals. Since the 19th
century, when philanthropists, religious groups, and the city itself
began enthusiastically building hospitals, a large proportion of medical
care has been given through hospitals. Today, New York City has more
hospital beds per capita than other American cities. But over the past
few decades, health care has shifted away from hospitals. Improvements
in medical care have allowed patients undergoing procedures that would
have kept them in the hospital for long periods to go home earlier.
Advances in drug treatments for AIDS, for instance, have allowed
patients who in the past have been hospitalized to live reasonably
normal lives.

Having clinics provide services that once required hospital
admissions has improved the lives of patients. But New York's hospitals
have found themselves under strain as they look for ways to adjust.

"Health care is a service or set of services that continuously feels
the pressures of change," said James Tallon of the United Hospital Fund.
"If you were at the top of the mountain in the hospitals' heyday then
you've got a little bit steeper slope as you face the changes."

Concentration of Services at Specialty Hospitals:

Such pressure is not being felt equally by all medical institutions in New York City, however.
Complicated surgeries and other procedures that must be handled in
hospitals are being concentrated in the academic specialty hospitals
such as Mount Sinai and Columbia Presbyterian that can afford to invest
in increasingly sophisticated equipment. These procedures bring in
money, and these hospitals have remained in good financial standing as a
result.

The situation is much different in smaller, community hospitals.
Because community hospitals are more likely to serve patients without
health insurance, they have less income than specialty hospitals. As a
result, they do not have funds to invest in the equipment for advanced
procedures - the kind that would allow them to develop a specialty and
bring in more income.

It is these hospitals that are in the greatest danger of closure, and
there is little disagreement about their perilous financial state. There
are diverging views, however, on why these hospitals are in such trouble
-- and on how best to respond.

ARGUMENTS FOR AND AGAINST CLOSING MORE HOSPITALS

It's Inevitable, So Do It Rationally

After years of financial trouble, Brooklyn Hospital decided to close
one of its branches - the Caledonian Division in Flatbush - to preserve
its main branch in downtown Brooklyn.

"It became increasingly evident that we needed to do something in
terms of a financial turnaround plan, or the place wasn't going to be a
viable organization anymore," said Nancy Peterson, Brooklyn's director
of planning.

The plan worked. In 2002 the hospital had lost $20 million; last year
it made $4.6 million.

Brooklyn Hospital made a choice that other hospitals in the city and
across the state have also faced in recent years. An increasing number
of public officials, health care industry groups, and representatives of
organized labor are saying that the state itself must follow Brooklyn
Hospital's lead. By closing hospitals in a rational manner, they say, the
state can make the health care industry more sustainable without
reducing access to care.

This spring, Governor George Pataki created a commission to examine
how to best 'right size' the hospital industry. This commission, the
Commission on Health Care Facilities in the 21st Century, will make
decisions about which hospitals to close by the end of next year, though
it is unclear what will happen with this list once it is formed.

The state and the commission itself insist that it will do more than
simply make a list of hospitals to close -- it also intends to look, for
example, at issues like the way hospitals are paid for serving Medicaid
patients. That said, its structure is based on the federal commission
that decides which military bases to close. The recommendations of the
commission are binding unless voted down by both houses of the
legislature in their entirety -- lawmakers cannot pick and choose what
to implement. The reason to have a commission that functions this way is
keep officials from deciding which hospitals to close based on political
considerations.

The commission operates on the belief that some closures are
inevitable. "The marketplace is driving some changes and contractions,"
said the chairman of the state commission, Stephen Berger, last week.
"We're not going to change that."

Berger and others believe that there are too many hospital beds in New York, a fact illustrated by
dropping occupancy rates in New York hospitals. According to the state's
department of health, hospitals operated at only 60 percent capacity in
2004, down from 73 percent ten years earlier. Dennis Whalen, the
department's executive deputy commissioner, has said that as many as
20,000 of the state's 63,000 hospital beds are unnecessary. These empty beds are straining the entire system.

The purpose of doing facilities in a comprehensive manner, instead of
dealing with each hospital closure issue as it emerges, is to improve
the overall efficiency of the health care system, allowing continued
access to medical care. This would not necessarily happen if
the state simply allowed the hospitals that were suffering financially
to fail.

"The most important institutions may or may not be the institutions
with the best balance sheets," said Berger.

Closing Hospitals Is A Mistake That The Poor Will Pay For

Critics question whether Berger and the commision really undertand this. They say that recent discussions about hospital closures have allowed financial considerations to subvert the
real issue posed by struggling hospitals: how the communities that rely
on them are being affected.

"Is [the health of these communities] going to be the tenth
consideration after a list of other things, or is that going to be the
starting point," said Louis Guida of the Save our Safety Net Campaign,
an umbrella group of organizations concerned about hospital closures.
"We think that should be the starting point."

Opponents of systematic hospital closures question the accuracy of
official occupancy rates, saying they disregard the reasons for low
rates. At St. Mary's, for instance, the beds in the maternity ward were
listed as empty in discussions leading to the hospital's closure,
driving the occupancy rate to jut above 60 percent. But these beds were not empty because
women didn't want to give birth at St. Mary's. They were empty because
the hospital had closed the ward in 2003 because it couldn't afford to operate it.

Supporters of hospital closings have also played down how disruptive
such closings are to patients, critics say. According to Alan Sager, a professor at Boston University School of Public Health who has studied
urban hospital closures across the country, 30 percent of patients whose
hospital closes simply stop receiving inpatient care.

"Patients displaced by a closing often take months or years to
re-weave the fabric of their medical services," he said. "Vulnerable
patients are made more vulnerable when hospitals close."

In addition, hospital closures tend to take place in areas with
vulnerable patients. This pattern certainly continues at St. Mary's.
Residents of central Brooklyn suffer disproportionately from every
single category of health problem that the city's department of health
keeps statistics on: from chronic diseases like diabetes, to violence,
to mental health problems and drug-related conditions. People in the
area are hospitalized at 30 percent higher rate than city residents as a
whole, and still 30,000 central Brooklyn residents go without necessary
medical care.

Such closures aggravate the very inequities that often caused the
hospital's financial problems in the first place, say health care
advocates. In order to confront these issues, advocates say New York
must:

deal with the 1.8 million people living in New York City who don't
have access to health insurance;

increase the effectiveness of public
health plans;

and confront the causes of epidemic rates of chronic
disease in low-income, minority areas.

Unless these issues are addressed, closing weak hospitals to improve
the financial standing of more stable ones will only shift the high costs of health care in New York,
not eliminate them.

THE CLOSING OF ST. MARY'S

Like many of their neighbors, Katrina and Harriet McCloud tried to stop St. Mary's
Hospital from closing. Katrina, working with an ad-hoc coalition of
groups called the Committee to Save Our Hospitals, organized her
neighbors and traveled to Albany to meet with state officials about
keeping the hospital open; Harriet was the plaintiff in a lawsuit to
keep the state from allowing the hospital to close. Hundreds of their
neighbors packed into the basement of a local church to voice their
concerns to public officials and hospital management; dozens filled
courtrooms during the bankruptcy proceedings of St. Vincent's Catholic Medical Center, which runs St.
Mary's.

But in the end, the financial burden was too much to overcome. Last
Tuesday, a judge gave St. Vincent's permission to begin closing the
123-year-old hospital. It has already arranged for ambulances to stop
coming to its emergency room, and is making plans to move the 70 or so
patients that are currently staying there to other facilities. St.
Vincent's is beginning to look for buyers for the physical hospital, and
says it hopes to find a developer who will build affordable housing on
the site.

The hospital's management says that it has made appropriate plans to
help those who were served by St. Mary's find replacement care. It notes
that there are several hospitals nearby, the closest being Interfaith
Medical Center on Atlantic Avenue, less than a mile away. But members of
the community don't think will be an easy adjustment. The Committee to
Save Our Hospitals singled out St. Vincent's plans to move the
hospital's mental health and detoxification units to Mary Immaculate in
Jamaica, Queens for criticism. By public transportation, the hospital is over an hour
from St. Mary's. In addition, St. Vincent's has said that it is looking
for buyers for the Queens facility - a signal that St. Vincent's is
having trouble paying to maintain it.

The McClouds, who visit one of St. Mary's clinics or its emergency
room almost weekly, have not begun to consider an alternative. Katrina
says she has no idea what she would have done when her mother's blood pressure
shot up had there not been an emergency room so close.

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